Why It Matters

The partisan divide and competing narratives over how to reform Medicare and Medicaid will be on full display at the February 3 hearing.

Republicans are building a legislative case that waste, fraud, and abuse in Medicare and Medicaid demand structural program changes.

Republicans argue fraud is systemic. Rep. Diana Harshbarger contends eliminating waste is necessary to "save Medicaid from collapse." Chairman Gary Palmer spent 26 hours in a markup session on healthcare fraud legislation. Federal watchdog investigations found that 90% of undercover ACA marketplace applicants with fraudulent documentation were approved.

Democrats counter that fraud claims are being weaponized to justify unpopular benefit cuts. The hearing will shape potential legislation affecting millions of beneficiaries and billions in federal spending.
Rep. Diana DeGette cites data showing Medicaid beneficiary fraud is less than 0.1%. She warns that Republican claims of saving $880 billion through fraud elimination would require massive benefit reductions.

Broader Context

Millions receiving Medicare and Medicaid services face potential eligibility restrictions.
Recent enforcement actions expose significant vulnerabilities. The Justice Department secured a $556 million settlement from Kaiser Permanente in January 2026 for inflated Medicare reimbursements. The 2025 National Healthcare Fraud Takedown charged 324 defendants with intended losses exceeding $14.6 billion.

Yet the parties dispute what these findings mean. CMS data shows 77 percent of Medicaid improper payments resulted from insufficient documentation rather than fraud. Democrats argue that only 2.5 percent of Medicaid cuts in the 2025 Budget Reconciliation Law actually targeted waste, fraud, and abuse.

Democrats highlight private sector fraud. UnitedHealth Group faces DOJ investigation for possible criminal fraud in its Medicare Advantage operations.

The Trump Administration’s recent creation of a Division for National Fraud Enforcement within DOJ underscores the political priority placed on this issue.

The Agenda

Between The Lines

Rep. Gary Palmer (R-AL-6) has positioned fraud elimination as central to his agenda, referencing a 26-hour markup session on healthcare legislation. Rep. John Joyce (R-PA-13) chairs the subcommittee.

Rep. Diana Harshbarger (R-TN-1) has argued that anti-fraud efforts will "save Medicaid from collapse."

Rep. Diana DeGette (D-CO-1) disputes the scale, arguing beneficiary fraud in Medicaid is less than one-tenth of one percent and that Republican savings claims would necessitate massive coverage reductions.

Rep. Alexandria Ocasio-Cortez (D-NY-14) characterized Republican proposals as "a direct attack on the program itself." She and Rep. Lloyd Doggett have urged DOJ to investigate UnitedHealth Group for alleged Medicare Advantage fraud.

The Bottom Line

Republicans view waste, fraud, and abuse as systemic threats requiring structural reforms, citing 90 percent approval rates for fraudulent ACA applications and record $6.8 billion in DOJ healthcare fraud recoveries.

Democrats counter that fraud is exaggerated to justify benefit cuts, noting 77 percent of improper payments stem from documentation issues, not fraud, and point to corporate malfeasance like UnitedHealth Group’s DOJ investigation.

The hearing will showcase competing narratives on program integrity with real-world implications for millions of beneficiaries and billions in federal spending.

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